Grand Rapids Community Foundation

For good. For ever.

Donor Advised Fund Frequently Asked Questions

How often can I make grant recommendations from my Donor Advised Fund?

Fund advisors can make grant recommendations from their fund as often as they like. Some fund advisors choose to recommend grants weekly or quarterly, and others make grants on an annual basis.

Back to top

Who can make grant recommendations from my Donor Advised Fund?

Only fund advisors listed on the original Fund Agreement are permitted to make grant recommendations from a fund. If you would like to add additional fund advisors, for example, children or grandchildren, please let us know in writing.

Back to top

I understand that grants from my Donor Advised Fund can only be made to charitable organizations that are recognized by the IRS as having nonprofit 501(c)(3) status. What is 501(c)(3) status?

According to the IRS, an organization described as 501(c)(3) is tax-exempt and eligible to receive tax-deductible contributions. It must be organized and operated exclusively for one or more charitable purposes including: relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erection or maintenance of public buildings, monuments, or works; lessening the burdens of government; lessening of neighborhood tensions; elimination of prejudice and discrimination; defense of human and civil rights secured by law; and combating community deterioration and juvenile delinquency. It may not engage in lobbying or other attempts to influence legislation as a substantial part of its activities and it may not be operated to benefit private interests.

Churches, schools, hospitals, and governmental units with 509(a)(1) status and public safety groups with 509(a)(4) status are also eligible for grants from Donor Advised Funds since both of these designations are sub-categories of 501(c)(3) status.

Back to top

Is it possible to recommend a grant to an organization that has not yet obtained 501(c)(3) status?

This is not encouraged, but it is possible if the project that you wish to donate to has a fiscal sponsor who is classified as a nonprofit 501(c)(3) organization. A grant can be issued to the fiscal sponsor if the fiscal sponsor understands that they, legally, have financial responsibility for the use of the funds. A letter from fiscal sponsor’s Executive Director is usually required.

Back to top

May I recommend a grant to an individual?

No. As a community foundation, Grand Rapids Community Foundation may make distributions only to qualifying nonprofit organizations. Scholarships and grants made as part of achievement award programs are sometimes exceptions. Grants of this sort require a formal application and selection process. For information about scholarships or achievement award grants, please call 616.454.1751.

Back to top

Can I specify exactly what I want grants from my fund to be used for when I recommend a grant for a particular organization?

Fund advisors can be as specific as they like. Simply detail your request in the ‘Purpose’ section of the Grant Recommendation Form and we will include your restrictions in the letter that is sent to the organization with their grant check.

Back to top

What are some common types of grants?

Here is a list of the most common types of grants made to nonprofit organizations:

Back to top

Can grants be made anonymously?

Donors always have a choice about whether or not they would like to be identified with a particular grant. To give anonymously, check the anonymous box on the grant recommendation form, and we will remove all references to your fund in the information that the grantee receives.

Back to top

If I serve on the board of an organization, may I recommend a grant to this organization from my Donor Advised Fund?

Yes, as long as you receive no personal benefit from the grant.

Back to top

Can I expect to receive a report from each organization as to how a grant was used?

Normally, the Grand Rapids Community Foundation does not require organizations to submit a final report unless they received a grant of $25,000 or more. If you would like to receive a report for a particular grant, please check the ‘Final Report Requested’ box on the Grant Recommendation Form and we will include this as a requirement of the grant in the letter that is sent to the grantee.

Back to top

How can I learn more about organizations that are effectively addressing specific issues?

The Grand Rapids Community Foundation has a professional staff with expertise in local nonprofit organizations. We would be happy to recommend organizations that we know are doing excellent work in the community. We can provide you with detailed descriptions and evaluations of programs along with copies of an organization’s financial records. We are happy to research the answers to any questions that you might have and arrange site visits. Site visits are an excellent way to see first hand what an organization is all about and to create a personal connection.

Back to top

Why can’t I make a pledge payment with a grant from my fund?

IRS regulations require that all final decisions about distributions from Donor Advised Funds be made by the Foundation’s Board. The word pledge implies a legal obligation on the part of the Foundation to satisfy a debt. If you make a pledge it suggests that part of your donation to the Foundation was restricted to a certain charity outside of the jurisdiction of the Board.

Back to top

Can I pay for tickets to a benefit dinner or golf tournament from my Donor Advised Fund?

It is permissible to pay for the cost of the tickets from a Donor Advised Fund, minus the fair market value of what is received in exchange.

Example One: Tickets for a charity golf tournament cost $125. Fair market value of a round of golf at the course, a golf cart, and the lunch that will be provided is $75. You could pay $50 of the cost for each ticket you purchase from your fund, and pay the $75 equal to the fair market value of each ticket personally.

Example Two: Tickets to the Halloween Costume Ball are $50. The fair market value of the dinner, entertainment, drinks, and gifts that will be provided is $50. You could not pay for this ticket from your fund since the cost of the ticket is equal to the amount that one would reasonably expect to pay for such an event.

The above examples are true even if all of the expenses for the evening have been donated and the charity will receive 100 percent of the proceeds. The IRS does not look at the cost of the event to the charity, but rather at the fair market value of the goods, services, or privileges received by the purchaser of the ticket. The organization hosting the event can tell you the fair market value of the ticket.

Back to top

Is it possible to sponsor a table at an event from my Donor Advised Fund if I will not be attending?

Yes, you may pay the entire amount from your fund as long as no one else who is related to you, or selected by you, will be benefiting from the donation by attending the event and sitting at this table.

Back to top

Can friends seeking funding for a project apply to the Grand Rapids Community Foundation?

While friends could not apply to the Community Foundation as an individual, if they work for a nonprofit 501(c)(3) organization, they may be able to apply for a grant. To qualify, an organization must meet certain requirements that can be addressed in the application process or by contacting our office at 616.454.1751 for more information.

Back to top

© Grand Rapids Community Foundation - 161 Ottawa Avenue NW 209 C - Grand Rapids, Michigan 49503 - 616.454.1751

national standards logo